Location, location, location: what makes a windstorm memorable?

While wind speed can indicate a storm’s damageability, two storms with similar peak wind speeds can cause vastly different levels of damage if they pass over locations with different concentrations of exposure.

This month marks the 15th anniversary of Lothar and Martin. Two powerful storms that tracked violently across Europe on December 26-28, 1999.

The combined European loss of both storms is in excess of $11 billion (2013 values). Since the storms occurred within days of each other it’s difficult to calculate the exact split of damage, however a 70:30 ratio is commonly accepted, ranking Lothar as the second largest Europe windstorm loss on record after Daria (1990).

France was hit hardest by the storms—particularly Paris, which was right in the bullseye of Lothar’s most extreme physical characteristics. The recorded wind speeds in the low-lying regions of Paris were above 160 km/h and as high as 200 km/h at the top of the Eiffel Tower.

An exceptional storm

While Lothar’s wind speeds are comparable to other historical Europe windstorms, it’s considered an exceptional event for the insurance industry because of its track and the timing of its maximum intensification over Paris. Today, Lothar is a key benchmark used by the industry to understand the potential magnitude of Europe windstorm losses.

Lothar – a one-off for France?

Many industry experts believe Lothar to be higher than a 100-year return period loss event for France; however this should be interpreted as a long-term average and France could potentially experience a similarly extreme storm this winter.

Using current industry exposures, RMS calculated the potential French losses that would result from a Lothar-like storm striking different locations in France. By relocating Lothar’s peak gusts along points up to 500 km in each direction from their original location, our modelers concluded that Lothar was the fourth worst-case storm that could have happened out of a total of 437 scenarios.

The worst-case scenario for France is a Lothar-like storm relocated approximately 100 km west of the original event but which would still significantly impact Paris. The losses from this scenario are not much higher than Lothar’s. At only 15 percent higher the small increase in loss reinforces Lothar as an exceptional benchmark for the insurance industry.

We found that the majority of scenarios in the study produced notably lower losses. This is because the displacement of the storm, by even small distances, meant that the most extreme wind speeds impacted much lower concentrations of insured exposures. The study reinforces our understanding of the sensitivity of windstorm loss to a storm’s path. It also highlights the importance of using a stochastic model containing tens of thousands of events to be able to comprehensively evaluate potential windstorm losses.

London at risk

No European city is immune from damaging windstorms. RMS also re-located Lothar over London—only a 350 km shift to the north—to see what the impacts would be. We calculated the insured loss for Europe could be as much as 25 percent higher than Lothar’s losses and potentially bigger than the $8.6 billion loss caused by Daria.

The uncertainty inherent to the climatic phenomena that drive windstorms makes it impossible to forecast exactly when and where the next strong storm will hit France or Europe. However, catastrophe models can at least help to evaluate the potential financial impact of extreme storms like Lothar.

Director, Model Product Strategy, RMS
Based in Zurich, Laurent initially joined RMS in 2008 as part of the Zurich account management team, servicing the European (re)insurance and ILS market. He then moved to the model product management group, leading the technical product management team for European climatic perils, such as windstorm, severe convective storm and flood. Since 2014, he has joined the model product strategy group for Europe model product line. Prior to RMS, Laurent worked 3 years at the Swiss Federal Institute of Technology Zurich (ETHZ) as a Research Associate and Lecturer, managing multidisciplinary natural hazard research projects. Laurent still lectures regularly on geophysics and catastrophe modeling at universities, and gives seminars and invited talks in international meetings. He is a Lecturer and Scientific Collaborator at the University of Fribourg (Switzerland). Laurent co-authored numerous industry publications, reviewed scientific articles and proceeding papers. He holds an MSc in Geology from the University of Lausanne and a PhD in Geophysics from the University of Lausanne and the University of Nantes.

Doing this kind of analysis is very useful for getting an idea of the worst case scenario.

Interesting in this case that the real event was already close to the worst possible event which, as you say, “ reinforces Lothar as an exceptional benchmark for the insurance industry”.

Impact Forecasting (Aon Benfield) did something similar to this with Kyrill, in a conference last year. They also created scenarios with the same location but ±5% and ±10% hazard intensity, which meteorologically speaking isn’t very correct but gives another potentially useful insight.

Great work and would be interesting to see how the losses would look if Martin was moved in conjunction with Lothar, since both storms were meteorologically linked.

Dear Alastair,
Thank you for your comment and interest. Yes moving both Lothar and Martin storms together may be another interesting test to run, especially as the market may have difficulties to split the losses between these two storms. Our work here was really motivated by investigating how exceptional Lothar is as a key benchmark for industry, especially as longer historical records about strong storms in France are missing.
Creating realistic worst case scenarios is a good tool to manage tail risk, and increasing the hazard of historical events in one way to do this actually. Note that you may end up building similar storms as you could find in a stochastic model: we ran a few times ago an internal project where we searched the RMS Europe windstorm model for stochastic events similar (or more damaging) than historical Lothar, and we managed to find several of them, which actually support the fact we have realistic severe storms modeled in tail.
Thanks,
Laurent

Moving Lothar over London is a very useful thing to – I especially like the idea of ‘Tangible Disaster Scenarios’ using historical events rather than using simulated events. It would be interesting to see an 87J aligned along the UK M4 corridor through Benelux and into populous N Germany.

Thank you for your comment. You are right, there are several of these scenarios that could be very insightful for the industry, and 87J is certainly one. Or more recently wind storm Christian: moving Christian’s track only 200km south-east would have meant strong peak gusts hitting Paris, Brussels, Amsterdam, Cologne/Hamburg/Berlin… An interesting one in terms of pan-EU loss correlation and another great example that location counts!